Answer:
Stock W Â 3.64%
Stock X Â 14.00%
Stock Y 21.28%
Stock Z Â 1.56%
Explanation:
We calculate the horizon value for each one. This will provide us with their price and with that, we solve for dividends yield
Stock W - Horizon Value
 3.50 x 1.10       3.85
----------------- Â = Â Â ----------- Â = 96.25
 0.14 - 0.10      0.04
Dividend yield: 3.50 / 96.25 = 0.036363636 = 3.64%
Stock X: g= 0
3.5 / 0.14 = Â 25
3.5 / 25 = 0.14
Stock Y g = -0.06
3.50 x (1 - 0.06) / (0.14 - (-0.06)) = 16.45
Dividend yield 3.50 / 16.45 = 0,212765957 = 21.28%
Stock Z
[tex]\left[\begin{array}{ccc}#&Dividends&Discounted\\&3.5&\\1&4.2&3.68\\2&5.04&3.88\\2&5.6448&217.17\\&TOTAL&224.73\\\end{array}\right][/tex]
First we solve for the next two dividends:
next year 3.50 x (1 + 20%) = 4.2
second year 4.20 x (1 + 20%) = 5.04
Here we solve for the horizon value of the constant grow:
5.04 x 1.12 / (0.14 - 0.12) = 282.24
now, we solve for the Present value of each one and add them together.
Getting a value of $224.73
We now solve for dividend yield: 3.50 / 224.73 = 0,01557 = 1.56%